It’s every retailer’s dream to know exactly how much inventory they have in stock in their stores and warehouses—and up and down their supply chain. Thanks to real-time inventory tracking, it’s now possible to monitor inventory levels minute-by-minute, giving you an accurate picture of what you have in stock and what you need to reorder.
For most of retail history, inventory tracking meant manual data entry in paper ledgers. While simple, this analog inventory management system could not provide real-time data. If a customer bought the last item in a store, it could take until the end of the day or the end of the week for word to get back to warehouse managers. Real-time inventory visibility has changed all that. Here’s how it works and how you can use it for your business.
What is real-time inventory?
Real-time inventory is the constant updating and monitoring of a company’s inventory levels as changes occur, ensuring the information is always current and accurate. As items are received, distributed to stores, and sold, inventory records are immediately adjusted to reflect the changes. Real-time inventory management typically uses advanced inventory management software to track exactly how many units of each item reside in specific locations.
Features of real-time inventory systems
Key characteristics of a real-time inventory system include:
- Immediate updates. Whenever a product is added to or removed from inventory, inventory counts are instantly updated, providing a precise view of current stock levels.
- Accurate inventory data. Real-time inventory systems reduce the likelihood of errors caused by delays in recording changes, helping to prevent stockouts.
- Visibility. Staff can access real-time inventory data, improving decision-making, such as restocking high-demand items or identifying slow-moving products.
- Efficient order processing. Real-time inventory systems can automatically trigger reorder points, helping companies maintain optimal stock levels without overstocking.
- Better customer experience. With accurate inventory information, companies can provide more reliable delivery estimates and prevent backorders.
- Cost savings. Real-time inventory management systems let companies avoid stockouts and the need for sudden rush orders to meet customer demand. This can save money and improve cash flow.
Benefits of real-time inventory management
- Avoid stockouts
- Enhance customer satisfaction
- Reduce dead stock and overstocking
- Improve supply chain operations
- Monitor multiple channels
- Minimize data entry errors
- Streamline purchase orders
- Make informed decisions
- Reduce shrinkage and theft
- Reduce labor costs
All retail sectors, from ecommerce stores to fulfillment companies, may find value in real-time inventory management systems. Here are some of the key features and potential benefits of real-time inventory management:
Real-time inventory data lets you reorder products before they run out, ensuring goods are always available for customers. This helps your sales teammeet demand and process as many orders as possible.
Enhance customer satisfaction
Accurate inventory data means customers can trust the items they want are in stock. This helps you meet customer expectations, which can lead to increased loyalty and potential future sales.
Reduce dead stock and overstocking
Excess inventory can quickly become obsolete, and needing to sell extras at a discount can reduce profitability. Real-time inventory systems prevent overstocking by providing a clear picture of current inventory levels.
Improve supply chain operations
Real-time inventory data lets you better coordinate your supply chain and distribution activities. This can lead to cost savings, reduced lead times, and more efficient business operations.
Monitor multiple channels
Real-time inventory solutions let you simultaneously manage multiple sales channels. For instance, you may sell items on your own ecommerce website, on Instagram, and on Walmart, with goods coming from multiple warehouses. Real-time inventory tools give you full visibility into each channel, helping ensure that you reach your full sales potential on all platforms at all times.
Minimize data entry errors
Manual data entry errors can lead to discrepancies between physical inventory and recorded inventory. Real-time inventory control systems reduce the reliance on manual data entry, minimizing the chances of errors and improving inventory accuracy.
Streamline purchase orders
Real-time systems can automatically trigger reorder points, based on historical data and demand forecasts. They can also generate purchase orders, and even allocate stock to fulfill customer orders. This streamlines the order processing workflow, reducing the risk of overselling and stockouts.
Make informed decisions
A real-time inventory management system can help provide a complete picture of your company’s logistics. In addition to real-time insight, many inventory tracking systems can generate detailed reports about your business’s sales trends, demand patterns, and stock movement. This can prove extremely helpful as you work to optimize inventory levels for future demand.
Reduce shrinkage and theft
Accurate inventory records make it easier to identify discrepancies and losses due to theft or shrinkage. This is particularly true when you use bar code scanners and radio frequency identification (RFID) tags to track inventory through your supply chain, warehouses, and retail stores.
Reduce labor costs
By automating inventory tracking, you not only cut down on human error; you also can streamline your workforce and enjoy cost savings. Inventory managers can still oversee operations, but the actual business of tracking inventory can be left to computer systems. Over the long run, this helps you save money and increase profit margins.
How to implement real-time inventory management
- Assessment and planning
- Select software and hardware
- Data migration
- Employee training
- Testing and quality assurance
- Monitoring and optimization
Implementing real-time inventory management can be a complex process, but breaking it down into manageable steps can help ensure a successful implementation. Here’s a seven-step approach for how to implement real-time inventory management:
1. Assessment and planning
Assess your current inventory management processes and systems, paying special attention to how they affect customer satisfaction. Define clear objectives for implementing real-time inventory management, such as improving customer satisfaction, increasing shipping speeds, or accommodating more customers.
2. Select software and hardware
Research and choose inventory management software that supports real-time tracking and reporting. If you already use enterprise resource planning (ERP) software, look for inventory management software that can work with it hand in glove. You’ll also want to invest in suitable hardware, such as bar code scanners, RFID technology, and mobile devices, to facilitate real-time data capture and updates, enhancing the entire process.
3. Data migration
Your new inventory management system must process data efficiently. Prepare your existing inventory data for migration into the new system, ensuring accurate processing of data. Integrate the chosen inventory management software with other critical systems like ERP, point-of-sale (POS) system, and ecommerce platforms to enable real-time data sharing.
4. Employee training
Offer employee training on how to use the new software and hardware effectively, emphasizing real-time access and the importance of accurately recording sales data. Create training materials and provide support for users as they adapt to the system to ensure accurate data recording and processing.
5. Testing and quality assurance
Conduct thorough testing of the real-time inventory system before full deployment, including scenarios to address unexpected events and challenges. Your system must continue processing data at all times, which lets you stay competitive within the marketplace.
6. Monitoring and optimization
Once the system is live, continuously monitor its performance. You may choose to audit the entire process at predetermined intervals to make sure your real-time inventory management system is working as intended.
Real-time inventory FAQ
How do you track real-time inventory?
You track real-time inventory by continuously updating and monitoring inventory levels as products are received, sold, or moved. In most cases, you’ll use advanced software and hardware systems that provide instantaneous data on stock quantities and movements.
What’s the best way to keep track of inventory?
Most businesses use advanced inventory management software to track how much inventory is in their warehouses, retail locations, and fulfillment networks.
Should I use real-time inventory management software?
Real-time inventory management software can be quite valuable if you operate multiple retail stores, use multiple warehouses, and sell via multiple sales channels. The software helps you chart the movement of inventory through your system and not lose track of valuable merchandise.